The Federal Communications Commission is targeting a long-standing paradox of telecommunications: Some dense local markets have the fewest options when it comes to broadband providers.
Fourteen years after the FCC banned exclusive contracts for Internet access in apartments, many building-specific monopolies continue thanks to other comfortable arrangements between landlords and existing providers.
In January, FCC Chair Jessica Rosenworcel introduced a resolution calling for an end to these current-preservation practices. Today it argued for the plan in front of a friendly Washington, D.C. audience — a conference hosted by the trade group Incompus, which represents several smaller telecommunications carriers. “A third of us live in apartments, condominiums, public housing or mobile home parks across the country,” Rosenworcel said. “And if you’re one of them, broadband options can be especially hard to find.”
Citing reports the FCC has received since seeking comment on the issue in September, Rosenworcel said it hurts apartment and condo residents who pay more for crumier service, but also broadband access to residents elsewhere. There are less options available.
“Building a network to compete with incumbents takes significant financial investment,” Rosenworcel said. Having a customer-dense portion of the market surrounded by specialized systems may prevent that investment: “An upstart ISP is going to be less likely to take the risk overall,” she said.
Rosenworcel did not estimate how many apartment dwellers are tied to these deals. But one executive with one startup — Brian Regan, SVP and chief of staff with fixed-wireless ISP Stari — said that “under most circumstances, building owners and building managers realize the benefits of adding competitive broadband, .. The structural problem in which the incumbents have created this anti-competitive environment.” The incumbent, he clarified, means “primarily large cable providers.”
The FCC’s proposal would prevent these mutual-back-scratching practices in three ways:
- It would ban revenue-sharing deals that reward a building owner for signing up more residents with a provider.
- This would require Internet providers to provide clear-language disclosures of any marketing deals they have with building owners.
- This would be a refuse sale and leaseback workaround, in which a provider sells its wiring in a building to a building owner, who then leases them back to the provider, denying access to competitors.
Regan called the graduation revenue-share deal, where a building owner’s stake increases as the resident sign-up with a partner ISP exceeds the negotiation threshold, is the “most nefarious” hurdle for Stari. All these practices combined, he said, represent “extremely anti-competitive behaviour”.
This problem has been going on for years; Harvard law professor and broadband-competition advocate Susan Crawford called it the “new payola” in 2016. wiredWired story. Rosenworcel’s predecessor Ajit Pai opened a “notice of investigation” in 2017 about promoting broadband competition in buildings. And in July 2021, the topic caught the attention of the White House in an executive order urging President Biden to urge the FCC to act.
It shouldn’t have taken that long. As Rosenworcel said on Tuesday: “Broadband is no longer just good to have, it’s needed.”